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Customer satisfaction = competition, not bundles

03 Jul

videotron-remoteJ.D. Power has released its latest customer satisfaction ratings of Canadian internet and television providers and the results, from east to west coast, were pretty telling on the state of competition for those two services.

In Eastern Canada, Quebec’s Videotron got top marks on both TV and internet service. Shaw’s satellite TV business also scored well while Cogeco did okay with internet service. In the West, Telus and MTS rated decently on TV while SaskTel customers are extraordinarily satisfied with the company. The same goes with SaskTel for internet service, where Telus also did well.

J.D. Power’s scores, which run from zero to 1,000, aren’t exactly explicit in what they mean – SaskTel gets a 705 for its internet service, for example – so I asked for some clarification. I was sent these charts (links to PDF), which do a better job at explaining through the use of a five-point “Power Circle” rating. Five circles, like what SaskTel has, means “among the best,” four equals “better than most,” three is “about average” and two is “the rest.”

In that respect, Bell scores as “the rest” with TV service across the country and with the internet service it offers in Ontario and Quebec. The same goes for Rogers on both services. That’s a striking contrast from their Western counterparts and Videotron in Quebec, who generally rate well or at least average. Why the difference?

J.D. Power points to the bundling of services as a strong driver of customer satisfaction. “Bundling typically provides discounts and has the added convenience of one bill with one provider,” said Adrian Chung, account director at J.D. Power, in a release. “These elements are key drivers of higher satisfaction and provide the stickiness that leads to long-term loyalty.”

But, given that Bell and Rogers offer bundles in their service areas, that’s obviously not the full story.

Customer satisfaction is generally made up of three components: price, customer service and the product itself. Geographic differences in these ratings inevitably highlights differences in competitive dynamics in those three areas. When competition between players is intense, prices are lower, customer service is better and products are continually improving.

The differing ratings therefore aren’t just because of bundles, they can in fact be considered a reflection of the state of competition, which confirms something we’ve known for a long time – things are better for consumers in Western Canada.

This is a fact the Canadian Radio-television and Telecommunications Commission should keep at the forefront of its current review of how TV services are sold.

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Posted by on July 3, 2013 in internet, television

 

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